Exclusive: Feds outsource vet benefit processing to Philippines

Department of Veterans Affairs (VA) officials are outsourcing healthcare paperwork for American veterans to low-paid workers in the Philippines, a nation where the minimum wage is a dollar a day.

Long ago, VA opened a facility in Manila to care for Filipino World War II veterans who fought alongside the U.S. against the Japanese — the Philippines was a U.S. territory until 1946. But most of those veterans are now dead, and the Philippines has its own government agency to care for those who are still alive.

Uncle Sam is better at opening offices than closing them, so the 100-employee office in Manila — the VA’s only foreign outpost — remains open for business.

At the same time the ranks of WWII veterans were steadily thinning, VA was experiencing a nationwide backlog in claims processing. So the Manila, Philippines office began picking up the slack for paperwork from the continental U.S. The Manila staff has developed a reputation for being particularly professional and efficient.

“A lot of them are passing away, obviously the majority of them are in their 90s, and we just have a few left,” Rima Nelson, the office’s director, told The Daily Caller News Foundation of the veterans who provided the reason for the outpost’s existence.

But “when VA was working very hard to reduce the backlog, cases got sent to different offices based on their capacity,” she said. Now, “we’re doing a lot of work from the states.”

Ninety of the workers are Filipinos, and they provide a far cheaper alternative to the VA’s U.S. workers who are unionized and insist on bargaining on seemingly every management decision and contest any discipline of bad workers.

While the Filipinos have no national connection to U.S. veterans, they serve them with dedication, Nelson said.

“We are efficient and the quality of the work is very good,” Nelson said. “We have a very dedicated staff who enjoy serving veterans, and our numbers show that we have high quality work when they do quality comparisons.”

This reporter called the Manila office several times and each time was promptly greeted by well-spoken, knowledgeable and friendly staff, something that rarely seems to happen when attempting to reach VA workers in facilities stateside.

The staff is paid in pesos at rates designed to be similar to what their peers in the Pacific nation make. The average annual income in the Philippines is $2,500. Nine Americans also work at the office, with Nelson making $160,000.

In addition to benefits claims processing, the office has a medical clinic that provides only outpatient care, and only for service-connected disabilities.

While the Manila clinic provides jobs for VA employees (nine in Manila are higher-paid Americans), it doesn’t provide services American veterans can’t get in other foreign countries. When U.S. veterans are abroad anywhere else in the world, they can get inpatient or outpatient care from private facilities and then be reimbursed by the VA.

“You get veterans complaining” that the limited services aren’t really a value-add,” Nelson said, as did some veterans commenting online. “There are also large veteran populations in Germany … and there are no VA clinics there” but veterans still get care, she acknowledged.

The Government Accountability Office (GAO) said skeptically in 2011 that “currently, maintaining the VA Philippines office could be justified, given its lower payroll costs, specialized workload, and other factors,” but “[a]s the number of Filipino WWII veterans’ and dependents’ claims declines, so should the need.”

The GAO also noted that “the office processes monthly compensation for about 6,000 Filipino WWII veterans with disabilities and dependents, a significant decrease from almost 34,000 in 1976.”

The five years since that report have seen a critical further drop. 2016 marks the 75th year since the U.S. entered World War II, meaning that a soldier who entered at 18 would be 93 years old.

The Manila office only has authority from Congress to operate for one year at a time, but Congress relies on VA’s numbers to determine whether continued operation makes sense.

Yet VA has only pointed out that its Manila workforce is cheaper than its unionized counterparts in the states.

“VA has not estimated the costs or savings that would occur if the outpatient clinic were closed and/or some of its health services were administered from the U.S., such as through the Foreign Medical Program,” GAO wrote.

“Except for its estimate of annual payroll savings for processing VA benefits in the Philippines, VA has not developed comprehensive information that would help decide the status of the office in the future, such as projections of the number of Filipino WWII veterans, U.S. veterans, and dependents in the Philippines and their potential future impact on office workloads.”